Tenax Therapeutics, Inc. — Q2 2021 Form 10-Q
Business context and reporting period
Quarter and six months ended June 30, 2021. Tenax is a clinical-stage specialty pharmaceutical company developing levosimendan for pulmonary hypertension and imatinib for pulmonary arterial hypertension (PAH). The filing reports no revenue; profit margins are therefore not meaningful.
Key financial metrics
| Metric | Three months ended June 30, 2021 | Three months ended June 30, 2020 | Six months ended June 30, 2021 | Six months ended June 30, 2020 |
|---|---|---|---|---|
| Revenue | No revenue reported | No revenue reported | No revenue reported | No revenue reported |
| Net loss | $1.72 million | $2.15 million | $25.47 million | $4.80 million |
| Operating expenses | $1.96 million | $2.14 million | $25.71 million | $4.81 million |
| Net cash used in operating activities | $1.9 million | $2.2 million | $5.07 million | $4.90 million |
At June 30, cash and cash equivalents were $1.67 million and marketable securities were $0.51 million. Current assets were $2.53 million, current liabilities $1.18 million, and working capital $1.36 million. Total liabilities were $1.41 million, including $340,500 in lease liabilities; the PPP loan had been forgiven and no note payable remained. Stockholders’ equity was $1.47 million, versus $4.63 million at year-end 2020. Accumulated deficit was $271.5 million.
Material changes versus prior periods
- First-half net loss rose sharply, primarily because the January PHPrecisionMed (PHPM) acquisition generated a $21.73 million in-process research and development expense. Tenax issued common and preferred stock valued at $21.58 million as consideration; the preferred stock converted into 10.232 million common shares after shareholder approval.
- Second-quarter net loss narrowed year over year, partly reflecting approximately $250,000 of other income from forgiveness of the $244,657 PPP loan and accrued interest. Second-quarter R&D expense declined as the Phase 2 HELP Study had been completed in 2020.
- Cash and marketable securities fell from $6.71 million at December 31, 2020 to $2.18 million at June 30, 2021. Common shares outstanding increased from 12.62 million to 25.20 million, reflecting the PHPM consideration and warrant exercises, among other activity.
Outlook, commentary and risks
- Management said June 30 resources plus net proceeds from the July 2021 financing were expected to fund planned operations through Q2 2022. The filing also states substantial doubt about the company’s ability to continue as a going concern, and that further financing is needed. Additional funding was not assured.
- On July 6, 2021, Tenax agreed to sell units for approximately $10 million gross, consisting of pre-funded warrants and warrants covering 9,546,538 shares in total. The company paid a 7.5% placement fee (approximately $750,000); the filing does not state a precise net-proceeds figure. Proceeds were intended for clinical development and general corporate purposes. Further equity financing could dilute shareholders.
- In the HELP Phase 2 study of levosimendan in PH-HFpEF, the primary endpoint—exercise PCWP change—was not statistically significant. Combined measurements across rest, legs-up and exercise, and 6-minute walk distance, showed statistically significant improvements. Tenax planned further development, including oral levosimendan studies; the FDA had discussed acceptable Phase 3 pathways but raised a potential need for additional safety data.
- Tenax planned a Phase 3 study of modified-release imatinib for PAH. Clinical development, regulatory approval, recruitment, COVID-19 disruption, access to financing, manufacturing and commercial viability remain risks. Milestone payments under the Orion levosimendan license had not been triggered as of June 30.
- CEO Anthony DiTonno retired effective July 13. His separation terms included salary and prorated bonus severance of approximately $563,000, subject to release conditions, and accelerated vesting of outstanding options.
Important facts for investors to verify
- Whether July financing net proceeds and subsequent cash burn support the stated runway through Q2 2022, and whether new funding will be required sooner.
- The final design, safety requirements, timing and funding for planned levosimendan and imatinib clinical trials.
- The implications of the failed primary HELP Study endpoint alongside positive secondary findings.
- Potential dilution from outstanding warrants and the July financing, including warrants covering 9.55 million shares.
- Separation costs and equity-award treatment following the CEO’s retirement, and any registration-related obligations arising from the July offering.